Microsoft Expands Intellectual Property Indemnification Coverage

By Peter Galli  |  Posted 2004-11-10 Print this article Print

Redmond execs say the company will provide IP protection for all current and past versions of its software, hoping to present yet another differentiator with open-source vendors.

Microsoft Corp. said it will expand its intellectual property protection policy and now cover all customers using current and earlier versions of its software, in a move designed to further differentiate its products from Linux competitors. Until now, Microsofts large volume licensing customers were the only ones protected under its IP indemnity program, but this latest move, to be announced by the Redmond, Wash., software maker on Wednesday, extends that to all users running software covered under the program. The IP indemnification program is designed to help shield users from exposure to legal costs and damage claims related to patent or other intellectual property disputes, and covers the four major forms of intellectual property disputes commonly associated with software: patent, copyright, trade secret and trademark.
The new IP indemnity covers the all versions of Microsofts software, including those to be released in the future, those current and all legacy versions except for Windows XP Embedded and Windows CE.
"Any of our products that people have licensed from us are covered. So, that dates all the way back to those old DOS systems, which are also in here," said David Kaefer, Microsofts director of Intellectual Property licensing, in an interview with eWEEK. "The easy way to look at this is that any software someone has licensed for a fee from Microsoft is covered except our embedded offerings—Windows XP Embedded and Windows CE—as we allow device manufacturers to change the code base for those products, and so we dont have full control over the code and the associated rights in some cases," he said. The move was not just in response to customer concerns about whether Microsoft would stand behind them in the event of a dispute, but also a way to differentiate its products by offering comparatively stronger indemnification than some of its leading Linux competitors. Click here for more on Microsofts latest anti-Linux campaign. With intellectual property lawsuits on the rise in all quarters of the industry as well as with all platforms, IP indemnification is a growing business. Programs are now offered by a many large companies, including Hewlett-Packard Co., Novell Inc. and Red Hat Inc. A marker for the rise of the issue, this spring, New York-based Open Source Risk Management LLC became the first company to specifically target open-source IP risks for developers and enterprises. John Loiacono, the executive vice president for software at Sun Microsystems Inc., of Santa Clara, Calif., told eWEEK that Sun also stands firmly behind its customers and currently indemnified Solaris users across the board and would continue to do that going forward. "In fact I think we indemnify every piece of software that we manufacture and ship, subject to certain financial caps. We also have a patent agreement with Microsoft," he said. Click here to read about how Microsoft and Sun ended their patent feud. Microsofts Kaefer said that, historically, over any three-month period, Microsoft would get a handful of calls from customers who had been approached by people owning IP who were asking those customers to pay for IP they said was in Microsofts products. "The good news is that a lot of these people do not have strong claims, we commonly refer to them as nuisance claims. We are now offering end-user indemnification across this vast array of our software and will now swing into action when these claims arise and see whether they have any merit or not," Kaefer said. Before its latest announcement, Microsoft execs laid the groundwork on the issue of IP indemnification. Late last month CEO Steve Ballmer sent an executive e-mail to customers, partners and subscribers. In that message he said that patent indemnification was a top issue for customers. "No vendor today stands behind Linux with full IP indemnification. In fact, it is rare for open-source software to provide customers with any indemnification at all," Ballmer said. Next Page: Finding the right level of indemnification

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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